The delay is not far from the economic situation of the country which was recently released in a report by the Debt Management Office.
The report from the Debt Management Office disclosed that currently, the Federal Government has borrowed N15.51trillion from the Central Bank of Nigeria through Ways and Means Advances, of which N14.86trillion was borrowed by the present administration.
According to the Debt Management Office, the N15.51tn owed by the Federal Government to the central bank is not part of the country’s total public debt stock which stood at N33.11tn as of March, 2021.
By explanation, Ways and Means Advances is a loan facility used by the Central Bank to finance the government in periods of temporary budget shortfalls subject to limits imposed by law while the Public Debt Stock comprises the debts of the Federal Government of Nigeria, the 36 State Governments and the Federal Capital Territory.
The report emphasised that according to Section 38 of the CBN Act, 2007, “The total amount of temporal advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government."
It added that, “All advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.”
Also, "the CBN’s guidelines limit the amount available to the government under its WMF to five per cent of the previous year’s fiscal revenues."
"However, the Federal Government’s new borrowing from the CBN has repeatedly exceeded that limit in recent years, and reached around 80 per cent of the FGN’s 2019 revenues in 2020,”
A former member of the CBN Monetary Policy Committee, Prof. Akpan Ekpo, has urged the government to minimise its usage of Central Bank Financing especially the CBN Loan Facility.
“The ideal thing is to avoid the ways and means facility, and most Countries avoid that,” he said.
Despite the increasing debt as detailed by the Debt Management Office, the Federal Government has proposed to borrow N5.62 trillion to finance budget deficits in the 2022 financial year.
The Minister of Finance, Budget and National Planning, Zainab Ahmad presenting the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) before the House Committee on Finance in Abuja on Monday disclosed that capital expenditure will be cut down in 2022 by N259.315 billion.
"On capital expenditure, the sum of N1,759,804,022,579 – as opposed to the N2,019,119,204,546 – will be available to Ministries Departments and Agencies (MDAs) of government in 2022. On the exchange rate, the naira is being pegged at N410 to one dollar, just as that minister told legislators that the projection is likely to come down in favour of the naira in 2023,” she said.
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